TECHNOLOGYMay 2, 2012, 2:25 p.m. ET
Microchip Tech to Buy Standard Microsystems for $939 Million
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By KRISTIN JONES
Microchip Technology Inc. MCHP -0.88% agreed to acquire semiconductor-equipment and circuit maker Standard Microsystems Corp. SMSC +38.83% for about $939 million as the analog-chip company seeks to expand into the automotive, industrial and other markets.
The deal values Standard Microsystems at $37 a share, a 41% premium to its Tuesday closing price of $26.24. In recent trading, the stock jumped 38% to $36.30, a price it last reached in early 2008.
The offer, which values the company's outstanding shares at about $830 million, also includes additional vested stock awards and options. Standard Microsystems had about 22.4 million shares outstanding as of April 17.
The transaction, which is subject to regulatory approval, is expected to close in the third quarter of the calendar year. It has been approved by the boards of both companies.
Microchip, like others in the semiconductor industry, has seen its profits sag over the last year amid a shaky global economy, though it saw recent sequential improvements in its microcontroller business.
Late Tuesday, Microchip said its fourth-quarter earnings fell 36% to $80.6 million, or 39 cents a share, from a year-earlier profit of $130.6 million, or 62 cents a share. Stripping out stock-based compensation, acquisition-related charges and other special items, earnings were 46 cents, up from 42 cents a year earlier.
Revenue fell 11% to $338.9 million.
Still, the company said sales in its microcontroller business saw signs of improvement, and that backlogs were improving.
"We went into this down cycle one quarter earlier than most of the semiconductor industry and we predicted we would come out of this cycle a quarter earlier than most," Microchip Chief Executive Steve Sanghi said Tuesday. "Based on the results of many of our industry peers, this prediction has played out exactly as we expected."
Standard Microsystems last month reported a fiscal fourth-quarter loss on stock-based compensation, restructuring and other charges. The company in recent quarters has suffered from weak demand for personal computer, industrial and other consumer products, offsetting strong growth in its automotive and wireless audio products businesses.